I thought I’d write a few belated notes up the latest LON:ALFA (I hold) results issued on March 23 – Paul wrote some excellent notes on it back in August 2020 in his SCVR ( it intrigued him) and I followed up with some background on their major stakeholder.
Since August the share price has doubled, and they have also issued a special dividend of 15p (10%+) – the stocko dividends summary omits this.
They also issued a “warning” in November that profits would be inflated by circa £4m due to early recognition of a software sale under IFRS.
The results are pretty impressive:
- Operating Profit +75%
- Pre-tax Profit +100%
- Revenue +23%
• Revenues included one-off licence income of £5.6m (2019: £5.5m), so underlying revenues are £73.3m (2019: £59.0m)
• TCV up 40% year on year to £112.9m as a result of good wins and successful go-lives – so most of this year’s orders already banked.
• Commencement of regular dividend, proposed 1.0p per share for Full Year 2020 – small, but IMO there’s a good chance of another special
• Six new customers won, with total number of customers increased from 26 to 32 as sales momentum picked up during the year – looks like it has a good moat.
Super Robust balance sheet position with £37m of cash and no debt – and very wealthy major shareholders.
A very conservative sounding forecast – “we’ll match last year”
My quick calcs say that the share trades on a sub 20 forward PE (£20m profit, £400m market cap, less £37m cash). This is cheap for a growing software company.
I’ve topped up my holding as I think it could double from here (and still be off its 2018 peak)
